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Vol:37 Sep/08

Dubai regulates off-plan property purchases

Dubai regulates off-plan property purchasesInvestors’ Guide for Realty Investment Calculations

The government of Dubai passed Law No.13 in August 2008 to regulate off-plan property sales in the emirate. The new law mandates registration with the Real Estate Regulatory Authority (RERA) and will become effective after its publication in the Official Gazette. The legislation is part of a governmental drive to guarantee investors stronger consumer rights in the region. Once implemented, it would protect realty investments, placing greater curbs on defaulters and unauthorized transactions.

How does Law No. 13 operate?

The Law puts forth the concept of the ‘Interim Real Estate Register’ under Real Estate Regulatory Authority (RERA), which is to be used to record all off- plan sales of real estate units in Dubai. Off-plan sales refer to the purchase of a property before the structure is actually built. Principally, any sale or other disposition that transfers or restricts title or any ancillary rights will be considered void if not recorded in the Interim Real Estate Register.

Sales undertaken prior to the law coming into force will also need to be registered in the Interim Real Estate Register. This should be done within 60 days of the Law coming into force.

Meant to augment real estate investments and instill greater transparency, the law forbids master developers and sub-developers to charge transfer fees on any off-plan sales. However, they will be allowed to accept administrative charges after approval by the Land Department.

Peter Penhall, CEO, Gowealthy.com says: “RERA's new regulations will be a natural progression. With the compulsory off-plan registration process, I just see this as part of a roll-out from Rera and its regulatory authority position. In general a market should be allowed to trade freely and that would show signs of maturity. Without any doubt the Dubai market from a real estate point of view is not any mature market. It is moving into some of its early phases and certainly is not a premature market.”
“There is an opportunity for buyers currently and can find varied opportunities as some of the speculators look to exit from the market as a result of Rera's recent amendments. You will see some of the properties being traded lower than market rate to allow those speculators to exit the market without too much damage.”

With the passing of Law No. 13, RERA would effectively become the first point of registering property and land sales in Dubai; this would speed up the process of issuing registered title deeds when the fully constructed building is handed over.

PROPERTY FACTBOX

Commencing businesses at Discovery Gardens, Dubai

Discovery Gardens is a self-contained community of residential and commercial properties by Nakheel. All building work within Nakheel communities is regulated by a building permit system administered by the Ports, Customs and Free Zone Corporation in cooperation with Nakheel Asset Management (NAM). A range of approvals must be given, particularly for commercial activities, before any building work can commence (including fit-outs and other modifications) and before the activity can be operated.

How to apply?

STEP 1
Commercial nature (for example, serviced apartments, hotel, shop, restaurant or office) needs to follow the application processes outlined below.

STEP 2
Obtain the Trade Licence for the activity from the Jebel Ali Free Zone Authority (JAFZA)

Note : The Trade Licence process will be administered by the newly formed regulatory authority, TRAKHEES

STEP 3
Obtain a Clearance Letter from NAM for the physical fit-out of the building or tenancy required for the activity

The modifications will also require the approval of the Civil Engineering Department (CED) and Environment Health and Safety (EHS) Department of the Ports, Customs and Free Zone Corporation (PCFC)

Note : The CED and EHS Departments will be incorporated into the newly formed regulatory authority, TRAKHEES, in the near future

STEP 4
Obtain a Licence for any external Signage proposed

NAM ’s Land Use and Compliance Section will advise you on matters such as assessment fees, application requirements and documentation, or any other queries you might have regarding the Trade Licences, Property Modifications or Signage approvals required for commercial activities within a Nakheel community.

Contact details
PO BOX 17176, DUBAI United Arab Emirates

+971 4 373 9938(T)
+971 4 361 2673(F)

(Licensing): licenseNOC@nakheel.com
(Modifications):propmodifications@nakheel.com